The U.S. Bureau of Labor Statistics released information that for the first time in two years, the hourly earnings for individuals increased by 0.2% on average, compared to May of 2022. This represents a significant economic shift. The report from the Labor Bureau indicates that it was the first positive reading since May of 2021. Prior to that, US workers had posted 25 consecutive months of reduced or eroded buying power, which represents the longest consecutive number of months of decreases on record. Inflation has clearly taken its toll on the American workers’ true buying power and their real wages have finally turned positive.
It was in 2021 when workers’ benefits saw a spike in their pay due to the increased intensification and demand for employees. Inflation hit so many households, driving prices to increase in such areas as food, rent and fuel but most especially within the housing market, where interest rates doubled over the course of simply 12 months. Household paychecks could not make up for the difference that inflation was taking out of their take-home pay. The inflation barometer peaked at 9.1% in June 2022, which represents the highest level in four decades, but now has fallen back to 4% annually, which still represents a very significant rate of inflation.
The good news is that this may potentially mark a turning-point where workers are finally starting to gain the upper hand in terms of their buying power. In certain areas, aggregate and per capita real disposable income has risen for the last 10 consecutive months since June 2022 according to the Bureau of Economic Analysis. Still, Americans are approximately $1 trillion in credit card debt as of March 2023, which is a record high. In addition, Moody’s estimates put the excess savings amassed during COVID-19 to be $2.5 trillion, but this has been significantly reduced, falling to $1.4 trillion, representing a huge drawdown. The news for the real estate market is if workers begin to see a continuation in real purchasing power, it will ultimately translate into their ability to purchase homes, especially for the first-time buyer.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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